Exxon Mobile is in the news again, as they released more information on their 2005 financial results. This one is interesting: in 2005 Exxon spent more money buying back stock than exploring for oil. So is investing in Exxon a better bet than investing in oil? Hmmm. Meanwhile, Exxon is not taking the bad publicity sitting down. They’ve been running full page ads saying, in effect, hey, other industries are better at making money than oil! Look at pharmaceuticals. Banking. Software. All higher margin. But none of these industries are selling commodity items. They are service or high tech (where the value comes from knowledge, not from the value of the raw materials). Commodity businesses, in a free and open economy, are supposed to be low margin. So why isn’t oil?
\nBut the comparison to the drug industry is interesting. Drug companies spend far more money winning, dinning, and effectively paying doctors to prescribe their drugs than they do researching new ones. Here is why such behavior is similar to the oil companies. Taxpayers are asked to subsidize two of the worlds most profitable industries – oil and drugs – through massive tax breaks, below market rate (or free) royalties on government property (government land for drilling, government patents for drugs, etc.), relief from environmental regulations, and numerous measures to protect these industries from competition. Why? We are told that these subsidies are needed to promote oil exploration and drug research. Really? At cursory examination of the financials of these two industries shows how ridiculous that assertion is.
\nCompany profits are good. Big company profits are even better. But profit gained by the subversion of a free market just means the consumer is in for a soaking. Fill-er-up.<\/p>\n","protected":false},"excerpt":{"rendered":"
Exxon Mobile is in the news again, as they released more information on their 2005 financial results. This one is interesting: in 2005 Exxon spent more money buying back stock than exploring for oil. So is investing in Exxon a better bet than investing in oil? Hmmm. Meanwhile, Exxon is not taking the bad publicity […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-6","post","type-post","status-publish","format-standard","hentry","category-general"],"_links":{"self":[{"href":"https:\/\/lithoguru.com\/life\/index.php?rest_route=\/wp\/v2\/posts\/6","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lithoguru.com\/life\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/lithoguru.com\/life\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/lithoguru.com\/life\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/lithoguru.com\/life\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=6"}],"version-history":[{"count":0,"href":"https:\/\/lithoguru.com\/life\/index.php?rest_route=\/wp\/v2\/posts\/6\/revisions"}],"wp:attachment":[{"href":"https:\/\/lithoguru.com\/life\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=6"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/lithoguru.com\/life\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=6"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/lithoguru.com\/life\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=6"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}